By Clay Creps
The Oregon Legislature has now begun to meet for the 2021 Regular Session. We want to make you aware of a number of interesting bills which could impact the employment arena. It is too early to know which of these, if any, will become law. However, it is helpful to look at these bills to see the trends in employment law.
Oregon Family Leave Act
Not surprisingly, in the wake of COVID, the Legislature is seeking to expand the availability of OFLA leave for employees. House Bill (HB) 2474 would expand the provisions of OFLA to include in the definition of employer any entity employing one or more persons (down from 25). The bill would shorten the time the employee had to be employed by the employer from 180 days to 30 days. Lastly, the bill would seek to make permanent the use of OFLA leave for closures of child care or schools which necessitates the employee having to care for a child. This last provision is obviously in response to the changes to life which have occurred because of COVID.
Noncompetition Agreements
The Oregon Legislature continues its assault on noncompetition agreements, a trend which we have witnessed over the past several years. Three bills have been introduced which would further limit the reach and enforceability of noncompetition agreements. HB 2325 would make noncompliant agreements void. This is a change from the current statute which simply makes such agreements voidable. Further, the bill would limit the term of a noncompetition agreement to 12 months, down six months from the current 18 months. The bill would further require that there be a protectable interest the employer is seeking to protect through the noncompetition agreement, and would require that the employee to be bound makes at least $100,533 annually, which amount would be adjusted for inflation on an annual basis.
Senate Bill (SB) 13 takes a different approach to limiting noncompetition agreements. It simply states that a noncompetition agreement is void and unenforceable unless it is limited to the protection of trade secrets, is a covenant not to contact former customers or clients to provide similar products, etc., or is for the protection of proprietary information. Basically, this bill would limit “noncompetition agreements” to nondisclosure agreements and nonsolicitation agreements.
Lastly, there is SB 169, which somewhat tracks HB 2325, requiring a protectable interest and a salary threshold (albeit this time at $97,311 adjusted annually for inflation). SB 169 does not seek to shorten the period of the noncompetition agreement.
Independent Contractors
HB 2489 would create a definition of independent contractor that Oregon agencies enforcing certain laws, including wage and hour laws, would apply. The bill first requires the agency to determine whether the individual meets the already existing statutory criteria for an independent contractor (which do not apply in the wage and hour context). If the agency so determines, then the agency is to weigh six factors to determine whether the individual is economically independent of the entity for which services are provided. (The bill actually says the agency is to determine that an employment relationship exists if the individual “is not economically dependent on the entity,” but this must be a typo, as not being economically dependent has historically been one of the cornerstones of the independent contractor relationship.) Lastly, HB 2489 would establish a presumption in any proceeding where a question of fact is at issue regarding whether an individual is an independent contractor or employee, that the individual is an employee “whenever another individual or entity engages an individual to perform services or labor for remuneration.” This presumption can be overcome by the entity showing a preponderance of evidence that the individual is in fact an independent contractor.
Retaliation Presumption
SB 483 would amend ORS 654.062 (pertaining to notice to employers by employees of health or safety violations), to create a rebuttable presumption in any action brought by an employee alleging adverse action for making a complaint of violation. The presumption, that the employer took retaliatory action in violation of the statute, would exist if the employer took action against the employee within 60 days after the employee notified the employer of the violation. Further, the bill is clear that if the adverse action occurs more than 60 days after the notice, this does not create a presumption that the employer’s action was justified. The burden would be on the employee to prove that a violation occurred.
Private Attorney General Act
HB 2205 would create a private attorney general act which would permit individuals to bring an action in the name of the State of Oregon and recover civil penalties for violations of state law. California has a similar act, which has proven to be widely used in the employment context. This could be a significant issue for employers if it becomes law. We will be monitoring this bill closely.
Burden of Proof in Discrimination Actions
SB 477 would create quite a change to discrimination actions brought under Oregon law. The bill would provide that an individual bringing suit under ORS 659A.030 (basic discrimination for protected classes) or ORS 659A.112 (discrimination based on disability) would not have to prove that: (1) the conduct giving rise to the action was sufficiently severe or pervasive so as to alter the employee’s terms or conditions of employment; (2) the plaintiff was treated less favorably than another similarly situated employee who is outside of the relevant protected class to which plaintiff belongs; and (3) prior to commencing the action, the plaintiff followed an employer’s internal personnel policies or procedures to report or complain about the occurrence of the underlying conduct giving rise to the action. This would be a significant departure from the state of the law currently applied to such actions. Obviously, this will lower the burden of proof for an employee to prove discrimination.
We will continue to track this regular session of the Oregon Legislature and will keep you apprised of future developments. Contact Clay Creps or any of the attorneys in our Labor & Employment Practice Group if you have any questions.
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